FCC to address mobile 'bill shock'

The U.S. Federal Communications Commission is poised to move forward on "simple and practical" rules intended to help mobile-phone customers avoid unexpected charges, the agency's chairman said Wednesday.

The FCC is scheduled to vote Thursday on proposed rules that would require mobile carriers to give customers notice when they're about to exceed their monthly voice, data or texting plans or about to incur large roaming charges, FCC Chairman Julius Genachowski said during a speech at the Center for American Progress, a liberal think tank. Consumers should receive warning notifications shortly before they're about to run up additional charges, Genachowski said.

While some carriers offer billing alerts, many others do not, Genachowski said. Three recent surveys, including one released by the FCC in May, have found that millions of U.S. mobile customers have experienced "bill shock," he said.

All U.S. residents should "have the tools to take advantage of new technologies without having to worry that someone's taking advantage of you," Genachowski said. "Companies should compete on value, price and service, not consumer confusion."

In the first half of 2010, the FCC received 764 complaints from mobile customers about bill shock. In 20 per cent of those cases, the unexpected portions of the bills were over $1,000, with the largest complaint for a bill of $68,505.

Thursday's vote is on what's known as a notice of proposed rulemaking, in which the FCC votes to start the process of creating new regulations. The agency will then release a set of proposed rules and seek comment from interested parties.

Genachowski didn't offer details of the proposal but said the agency will focus on technologies for sending warning notices that are already in use. Several other nations require mobile-phone carriers to warn customers about extra fees, he said.

Three mobile customers joined Genachowski at the event. Kerfye Pierre, a Maryland employee of the U.S. Federal Emergency Management Agency, received a US$35,000 bill from her carrier for texting and e-mailing from Haiti, where she was visiting relatives when the January earthquake struck. Her carrier had offered free calling from Haiti following the earthquake, but voice service was unreliable and Pierre wasn't aware that text messages and e-mail weren't covered by the free offer, she said.

Pierre's carrier eventually suspended most of the bill, but she's still working with the FCC to get the remaining $5,000 eliminated, she said.

Robert St. Germain, a retired marketer from Massachusetts, received an $18,000 bill from his carrier after he signed up for a new mobile contract in 2006. The carrier didn't tell him his free data download service was expiring, St. Germain said. The carrier reduced the bill to $8,600, but took that amount to collections, St. Germain said. After the FCC got involved, the carrier cancelled the bill earlier this year, he said.

The data service his carrier provided "cost them pennies," St. Germain said. "Bill shock is a very high margin in the industry."

New regulations may not be needed, countered CTIA, a trade group representing mobile carriers. More than 97 per cent of billing problems reported by mobile customers are resolved, according to the Better Business Bureau, and a large majority of customers are satisfied with their mobile service, said Chris Guttman-McCabe, vice president for regulatory affairs at CTIA.

In the past year, the number of text messages sent by U.S. mobile users rose by 33 per cent and the number of multimedia messages rose by 187 per cent, yet the average monthly bill fell by more than four per cent, he said.

"This is an equation that works for consumers," Guttman-McCabe said in a statement. "We agree with the FCC that the goal is to keep all customers happy, but we are concerned that prescriptive and costly rules that limit the creative offerings and competitive nature of the industry may threaten to offset these positive trends."

Pro-consumer policies promote innovation and competition, Genachowski said. "Technology-driven transparency is a powerful tool," he said. "The more consumers know, the more likely it is that the company offering the best product, or service or price will come out on top."

In addition to "bill shock," the FCC will look to take action on early termination fees in coming months, Genachowski said. Early termination fees can be appropriate when carriers are subsidizing the cost of phones, but some early termination fees are not in line with the cost of the devices, he said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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